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The 7 Steps to a Successful Not-For-Profit

The 7 Steps to a Successful Not-For-Profit. Version 1.0. 7 common reasons for Business Success. 7 Steps to a Successful NFP. 7 Steps. Workbook: Page 4. Have a plan, not just a vision Monitor your financial position Manage cash Flow

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The 7 Steps to a Successful Not-For-Profit

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  1. The 7 Steps to a Successful Not-For-Profit Version 1.0

  2. 7 common reasons for Business Success 7 Steps to a Successful NFP 7 Steps Workbook: Page 4 • Have a plan, not just a vision • Monitor your financial position • Manage cash Flow • Understand the relationship between price, volume and cost • Manage growth • Borrow properly • Plan for transition • Have a plan, not just a vision • Monitor your financial position • Manage cash Flow • Understand the relationship between price, volume and cost • Manage growth • Borrow properly • Plan for transition 2 version 1.0

  3. Have a plan, not just a vision. 7 Steps to a Successful NFP Workbook: Page 5 “Fail to plan, Plan to fail”. version 1.0 3

  4. The 7 P’s of Planning 7 Ps of planning Workbook: Page 5 Purpose Product People Place Price Promotion Performance

  5. Mary & Friends Soup Kitchen Workbook: Page 6 Mary & Friends Soup Kitchen Ltd was formed in 2005 with the sole purpose of helping those less fortunate with the basic necessities of food and drink. As the result of a natural disaster a number of years back, Mary and two of her friends experienced the hardships and challenges of being temporarily homeless. Mary and her friends saw the creation of the Soup Kitchen as a way of giving back to the community that had helped them, all those years ago. With a common passion for cooking for family and friends they first began operating one night a month using the local community hall’s kitchen facilities. Over the years the organisation has certainly grown. Whilst serving the majority of their meals in the local community hall, there was an opportunity 2 years ago to purchase a soup van that now allows the organisation to set up mobile soup kitchens in other areas. As more and more people started to make use of the service they began to see the need to make the service more available, more often. As a result by the end of the 2nd year they had 6 volunteers helping to provide meals every second Friday at the local community hall. This has now grown to 30 volunteers and 3 remunerated positions (CEO and 2 paid supervisors) and the organisation now serves over 2,500 meals per year. A number of strong relationships have been built over the years with local food retailers and restaurants who are encouraged to donate surplus food, rather than throw it out. Activity: Review the business plan over the next few pages and provide Mary and the organisation with some thoughts on what has been done well and where the plan could be improved. version 1.0 5

  6. Mary & Friends Soup Kitchen version 1.0 6

  7. Action Plan Workbook: Page 9 version 1.0 7

  8. Have a plan, not just a vision. Monitor financial position. 7 Steps to a Successful NFP version 1.0 8

  9. The Financial Operating Cycle Financial operating cycle Workbook: Page 10 Purpose = + Revenue Assets Liabilities Equity Expenses 2 uses of Surplus 1. Reinvest in Assets 2. Reduce debt Surplus

  10. Case Study – Mary & Friends Soup Kitchen Workbook: Page 11 In order to understand and monitor their financial position the organisation has provided the last 3 years financial statements and has requested your assistance in putting together a comprehensive report for delivery to the Board. version 1.0 10

  11. Case Study – Mary & Friends Soup Kitchen Workbook: Page 12 Income Statement for the 3 x 12 months ending 30 June YYYY

  12. Case Study – Mary & Friends Soup Kitchen Workbook: Page 13 Balance Sheet as at 30 June YYYY

  13. Case Study – Mary & Friends Soup Kitchen Workbook: Page 14

  14. Have a plan, not just a vision. Monitor financial position. Understand the relationship between price, volume and cost. 7 Steps to a Successful NFP version 1.0 14

  15. Price, Volume and Cost Price, volume and cost Purpose Break Even

  16. Case Study – Mary & Friends Soup Kitchen Workbook: Page 18 The organisation is looking to produce and sell a cookbook to the local community as another way of raising much needed funds for the service. What Mary would like to know is how many books the organisation needs to sell if they were priced at $20. She has calculated that the fixed costs for the book will be $360 and the variable cost per book will be $8. version 1.0 16

  17. Have a plan, not just a vision. Monitor financial position. Understand the relationship between price, volume and cost. Manage cash flow. 7 Steps to a Successful NFP version 1.0 17

  18. Cash versus Accrual Cash versus accrual Workbook: Page 20 • Cash v accrual Purpose

  19. Cash Flow Budget & Surplus plan Cash flow budget and surplus plan Workbook: Page 21 Purpose

  20. Seasonality Seasonality Workbook: Page 22 Purpose

  21. Seasonality Seasonality continued Workbook: Page 23 Purpose

  22. Have a plan, not just a vision. Monitor financial position. Understand the relationship between price, volume and cost. Manage cash flow. Manage growth. 7 Steps to a Successful NFP version 1.0 22

  23. Plan and Manage for Growth Plan and manage for growth Cash Clients Stock Debtors Staff Equipment Space

  24. Cash gaps Cash Gaps Workbook: Page 24 Additional Clients / Revenue • Cash Gap 1. How much will it cost? • . Where will I get it from? • . Do I like the picture I’m painting? Cash

  25. Impact of growth Impact of Growth Workbook: Page 25

  26. Have a plan, not just a vision. Monitor financial position. Understand the relationship between price, volume and cost. Manage cash flow. Manage growth. Borrow properly. 7 Steps to a Successful NFP version 1.0 26

  27. The cardinal rule The Cardinal Rule • Match the life of the loan to the life of the asset.

  28. The Asset Funding Model Asset funding model Workbook: Page 26 Asset type: Funding source: Repay from: INCREASING DEMAND FOR SERVICES Short Term Debt/ Cash Cash Flow Fluctuating Current Assets Creditors / Equity Cash Flow / Net Surplus Permanent Current Assets Long Term Debt / Equity Net Surplus Fixed Assets

  29. Have a plan, not just a vision. Monitor financial position. Understand the relationship between price, volume and cost. Manage cash flow. Manage growth. Borrow properly. Plan for transition and succession. 7 Steps to a Successful NFP version 1.0 29

  30. Transition Issues Transition issues Workbook: Page 27 • Individual leaves. • Outcomes achieved. • Merging organisations / partnerships. Purpose

  31. Have a plan, not just a vision. Monitor financial position. Understand the relationship between price, volume and cost. Manage cash flow. Manage growth. Borrow properly. Plan for transition and succession. 7 Steps to a Successful NFP version 1.0 31

  32. Next steps Next Steps • <Contact Name> • <Contact Details> version 1.0

  33. DISCLAIMER • Unless otherwise stated, the material discussed in this publication has been prepared by Westpac Banking Corporation ABN 33 007 457 14 (“Westpac”) AFS Licence 233714 in conjunction with external sources. Although it is believed to be accurate, to the extent permitted by law, no liability is accepted for errors or omissions suffered as a result of inaccuracies. Information in this publication that has been provided by third parties has not been independently verified and Westpac (or any member of the Westpac group of companies) is not in any way responsible for such information, or for the accuracy, currency, completeness of or endorses any such material. Material contained in this presentation is an overview and summary only and should not be considered a comprehensive statement on any matter nor relied upon as such. The information in this document is general only and does not take into account anyone’s personal objectives, financial situation or needs. You should therefore consider its appropriateness having regard to these factors before acting on it and obtain a copy of the product disclosure statement for a financial product available from any Westpac branch before acquiring the product. The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. Westpac Financial Planners may only give tax advice as part of the investment advice service. You should consult with a registered tax agent for advice about your tax return and obligations. Past performance is not a reliable indicator of future performance. The hardcopy handout of this presentation does not contain important information contained within the presentation. You should not rely on any statement in the handout and no guarantee, representation or warranty is is given that the handout is complete, accurate or up to date or fit for any purpose. If you are considering taking out a margin loan you might be exposed to greater risk including risk of margin calls and losses in a falling market. You should consult a Westpac Financial Planner to ensure margin lending is appropriate for you. version 1.0

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